10:51 UNIVERSAL HOLD<00419> - Announcement (2) Upon completion of the UHL SP Agreement (as amended by the Supplemental Agreement), the Company will satisfy the Basic Consideration as to (i) HK$149,281,973 by way of issuing 3,046,570,871 Consideration Shares (at an issue price HK$0.049 per Share) to Mr. Ko (or his nominee); (ii) HK$103,984,694 by way of the issue to Mr. Ko of the first tranche convertible note (the "First Tranche Convertible Note") (convertible into 2,122,136,612 new Shares based on the initial conversion price of HK$0.049 per Share); and (iii) the balance of the consideration payable under the Deed of HK$113,400,000 by issuing 2,700,000,000 Consideration Shares to the Vendor (at an issue price of HK$0.042 per Share). If the Audited Profit multiplied by 9.167 (which is the price-to-earnings ratio adopted under the price adjustment mechanism under the Deed) exceeds the Basic Consideration, the Company will pay the difference, subject to a cap of approximately HK$183.3 million, to Mr. Ko as additional consideration for the acquisition of the entire issued share capital of Orient Ventures (the "Further Consideration"). The Further Consideration will be satisfied by the issuance of a second tranche convertible note by the Company with an equivalent principal amount (the "Second Tranche Convertible Note"). If the maximum amount of the Second Tranche Convertible Note is issued, it will carry rights to convert into 3,741,496,591 new Shares based on the initial conversion price of HK$0.049 per Share. Amendments to the Deed On 11 May 2005, the Vendor, Mr. Ko, Orient Ventures and the Company entered into a supplemental deed in connection with the Deed (the "Supplemental Deed") pursuant to which any cash compensation payable by the Vendor pursuant to the price adjustment mechanism under the Deed as disclosed in the First Announcement will be assigned by Orient Ventures to Mr. Ko. Such amount may be offset against the same amount payable by Mr. Ko to the Vendor under the promissory note to be issued by Mr. Ko to the Vendor upon completion of the Deed. Further, no charge will be created on the promissory note of HK$183 million in favour of Orient Ventures. As mentioned in the announcement of the Company dated 31 March 2005, the Investment Agreement has been terminated. Orient Ventures has, pursuant to the Supplemental Deed, agreed to waive the relevant conditions precedent of the Deed in connection with the Investment Agreement. As part of the Reorganisation, a 98% interest in Hao Ge has been transferred to Anglo Alliance. It was originally anticipated that the remaining 2% would be held by Beijing Hua Yi Union upon completion of the Reorganisation. The 2% interest in Hao Ge is presently held by the spouse of the Vendor, who is not a concert party of Mr. Ko, instead of Beijing Hua Yi Union. Pursuant to the supplemental deed, references to Beijing Hua Yi Union in the Deed have been amended to reflect the fact that the above 2% interest in Hao Ge is held by the spouse of the Vendor and not by Beijing Hua Yi Union. Terms of the First Tranche Convertible Note and the Second Tranche Convertible Note The terms of the First Tranche Convertible Note and the Second Tranche Convertible Note remain materially the same as those of the Convertible Note as summarized in the First Announcement save that: 1. the First Tranche Convertible Note and the Second Tranche Convertible Note will mature on the same date, being the fifth anniversary of the date of completion of the UHL SP Agreement provided that the accumulated net profit after tax and extraordinary items of the Anglo Alliance Group from the date of completion of the UHL SP Agreement up to the fifth anniversary of the date of completion of the UHL SP Agreement shall not be less than the actual consideration paid by the Company under the UHL SP Agreement (being the aggregate of the Basic Consideration and the Further Consideration); in the event that the above proviso is not fulfilled, the maturity date shall be the date falling on the fifth business day after the issue of the financial statements for a financial year in which the accumulated net profit after tax and extraordinary items of the Anglo Alliance Group from the date of completion of the UHL SP Agreement up to that financial year shall be more than or equal to aggregate amount of the Basic Consideration and the Further Consideration; and 2. the First Tranche Convertible Note and the Second Tranche Convertible Note shall be interest free up to the fifth anniversary of the date of completion of the UHL SP Agreement. Shareholding structure of the Company The table below sets out for illustrative purposes the shareholding structure of the Company (a) as at the date of the First Announcement,